The recommended starting structure is a conventional Indonesian note, distributed to verified institutional professional investors in Hong Kong. Use Indonesia’s regulated non-public debt issuance route and Kustodian Sentral Efek Indonesia (KSEI) securities accounts, with a permissioned token record reflecting those holdings. Keep the proposed website limited to submitting and tracking transfer instructions until its actual functions have been assessed. Broader trading requires a separately authorised operating model.
The recommended route
- Name the Indonesian company that owes principal and interest. Document any guarantee or security separately.
- Use the Indonesian issuance, custody and investor eligibility arrangements required for the selected note. Hong Kong investor status cannot replace them.
- Engage a Hong Kong intermediary with the necessary Type 1 permission and complete the advance engagement with the Securities and Futures Commission (SFC) for tokenised securities activities.
- Make the securities records, payment obligations and token controls consistent. A wallet balance must not create competing claims.
- Launch wider transfers only after resolving dealing, automated trading, custody and Indonesian technology regulation.
Establish the debt and the Indonesian issuance route
The group must first choose its actual obligor. A group name does not identify the company against which investors can claim repayment. The note should state principal, interest, maturity, ranking, default events, acceleration and enforcement rights. Identify who receives payments, who gives notices and who can act when the issuer defaults. If another group company supports the debt, specify its guarantee rather than relying on a description of group assets.
For an Indonesian limited liability company, check its constitution, corporate purpose, directors’ authority and conflicts. Shareholder approval can be required for transferring or securing more than 50% of net assets, subject to the statutory exceptions. A tokenisation resolution cannot replace the approvals for the underlying borrowing, guarantee or security. (Law No. 40 of 2007 on Limited Liability Companies, arts 92, 98, 99 and 102, as amended.)
A concrete starting product is a non-convertible rupiah note with a maturity exceeding one year. If the relevant issuance value reaches Rp1 billion, including aggregated smaller issues within a year, POJK 30/POJK.04/2019 supplies a regulated non-public route. It requires scripless collective custody, professional investors, no more than 49 holders and book-entry units of at least Rp25 million or multiples. These are Indonesian requirements, separate from Hong Kong’s exemptions. (POJK 30/POJK.04/2019, arts 3–4 and 7–9.)
If the chosen issuer is neither an Emiten nor a public company, the ordinary route also requires an underwriting firm licensed by Indonesia’s Financial Services Authority (OJK) as issuance arranger and an OJK-registered trustee institution as monitoring agent. Rating or security/guarantee covering at least 100% of nominal value is required for that issuer category. The regulation contains exceptions, so confirm the issuer’s actual status before appointing the parties. Issuance documents must be submitted to OJK; the issue must occur within the applicable 30-day window. This is not a 30-day waiting period. (POJK 30/POJK.04/2019, arts 4, 10, 12 and 15–18.)
For the KSEI medium- or long-term note route, the issuance agreement must be made by an OJK-registered notary. The issuer must appoint KSEI as paying agent for a note exceeding one year. (KSEI Circular SE-0005/DIR-EKS/KSEI/1121, paras 2.2.1(d) and 2.2.2(d); KSEI Rule II-B, para 3.3.1.)
Security needs its own asset-specific creation, registration and enforcement analysis. The monitoring agent’s statutory monitoring role should also be supplemented with express contractual enforcement powers where needed. Do not describe the notes as secured until the security has been validly constituted and its priority established.
Prepare Bahasa Indonesia and English transaction documents together. Indonesian-party agreements engage the statutory language requirement. However, absence of Bahasa Indonesia does not automatically make an agreement void: the Constitutional Court rejected that consequence in March 2026. The drafting response remains bilingual execution and a carefully settled interpretation clause. (Law No. 24 of 2009, art 31; Presidential Regulation No. 63 of 2019, art 26; Constitutional Court Decision No. 188/PUU-XXIII/2025, [3.14]–[3.15].)
The Spanish tokenised bonds for a Mexican property project analysis raises a related structural choice: which entity promises repayment and how the project assets support that promise. Here, the Indonesian issue and ownership arrangements must be settled before the Hong Kong distribution documents are finalised.
Make the ownership record decisive
KSEI’s debt registration rules require the issuer to recognise the recorded securities holder’s ownership and payment rights. KSEI account confirmations and statements provide evidence of that holding. The proposed token register should therefore mirror the agreed securities-account position; it should not purport independently to transfer the underlying debt. (KSEI Rule II-B, paras 1.4 and 2.1–2.5.)
Foreign institutional participation is compatible with this structure. Arrange each investor’s custody through an eligible KSEI participant, with an individually identified client sub-account and the required investor identification. Establish Indonesian professional-investor eligibility separately from Hong Kong status. An overseas licence does not automatically establish an Indonesian qualifying category. For an institution using the other-entity route, document risk-analysis capability, at least one year’s capital-market experience and the applicable assets or portfolio threshold. (POJK 11/POJK.04/2018, arts 5–7, incorporated by POJK 30/POJK.04/2019, art 1(9).) The vendor’s wallet database should not substitute for that account chain. (POJK 30/POJK.04/2019, arts 7–9 and issuance-results annex; KSEI Rule I-C, 22 May 2026, paras 3.1.1 and 3.1.5–3.1.8.)
The issuance agreement, custody documents and token terms should identify one consistent source for determining entitlements. State when a securities transfer becomes effective, when the token record updates and what happens during a mismatch. Require reconciliation before issuance, interest payments, transfers and redemption. Prevent duplicate minting and ensure redeemed notes cannot leave transferable tokens outstanding.
If the business instead wants the blockchain to constitute legal title, the structure needs a fresh ownership and transfer analysis. For an Indonesian-law transfer of a named receivable, Civil Code article 613 requires a deed of assignment; effectiveness against the debtor also depends on notification or written acceptance or acknowledgment. A token movement cannot simply be assumed to perform those legal steps. The conventional account-based route avoids making that unresolved assumption.
Establish the Hong Kong offer and distributor permissions
Corporate debt securities engage Hong Kong securities law even when represented by tokens. The chosen intermediary should confirm its Type 1 dealing permission, licence conditions, product capability and the precise distribution activity. A distributor’s appointment does not extend its licence to the issuer’s technology provider. (Securities and Futures Ordinance, Cap. 571, s 114 and Sch. 5.) If the intermediary conducts bookbuilding or placing within the SFC Code’s scope, it must also meet the applicable issuer-assessment and written-appointment requirements. (SFC Code of Conduct, paras 21.1.1–21.1.2(b) and 21.3.1–21.3.2.)
Two offer controls need separate treatment. For a company’s debentures, the professional-investor exclusion from the prospectus definition appears in the Companies (Winding Up and Miscellaneous Provisions) Ordinance. The Securities and Futures Ordinance separately controls investment advertisements and invitations. Its professional-investor exemption concerns securities disposed of, or intended to be disposed of, only to professional investors. Document the basis under both regimes. (Cap. 32, s 2(1), Sch. 17, Part 1, para. 1; Cap. 571, s 103(3)(k).)
For the first distribution, select institutional professional investors within paragraphs (a)–(i) of the statutory definition. Record each investor’s qualifying category and supporting evidence before making the offer. Restrict access and onward distribution accordingly. A “professional investors only” legend cannot establish the recipient’s status. (Cap. 571, Sch. 1, Part 1, s 1, definition of “professional investor”.)
Expanding the audience to wealthy individuals or private investment companies adds another assessment. Their eligibility under the Professional Investor Rules does not import every institutional licensing or conduct exemption. Those Rules expressly exclude Schedule 5 from their extended categories. Under the SFC Code, corporate suitability exemptions require the specified assessment and consent; individual professional investors do not receive the same suitability exemptions. (Cap. 571D, ss 3–8; SFC Code of Conduct, January 2026 edition, paras 15.2–15.5.)
The Mauritian fund manager’s Hong Kong distribution analysis also separates investor eligibility from permission to conduct distribution. For these bonds, the distributor should additionally document whether the underlying instrument is complex and which suitability obligations apply. Tokenisation alone does not make an otherwise conventional security complex, provided its technology risks are adequately addressed. (SFC circular 23EC52, paras 23–27.)
Apply the SFC tokenisation requirements to the actual product
As at 6 November 2026, the November 2023 intermediary circular remains central to the SFC tokenisation requirements. It calls for advance notification and discussion with the SFC, together with product and technology due diligence. A distributing intermediary must assess the issuer’s and vendors’ arrangements. An intermediary that issues or is substantially involved in issuing the tokenised securities retains overall responsibility for the tokenisation arrangement despite outsourcing. The circular also requires disclosure of token-related risks and arrangements. (SFC circular 23EC52, paras 11–20 and 35.)
Build the diligence file around the proposed system: legal ownership, settlement finality, smart-contract review, administrator powers, transfer restrictions, recovery, cybersecurity and continuity. The assessment should cover private-key loss, unauthorised transfers, network failure and vendor exit. Custody must distinguish the underlying securities from control of tokens or keys. These concerns remain relevant where the blockchain is a secondary record. (SFC circular 23EC52, Appendix, Part A.)
The commercial documents should turn those findings into deliverable obligations. Require evidence of testing, incident reporting, access controls and a usable migration plan. Investors should understand whether their rights survive an outage and how they obtain records without the vendor’s website. Do not promise continuous liquidity or irreversible settlement when transfers depend on checks and securities-account updates.
Indonesia also needs a technology classification. Law No. 4 of 2026 expressly brings tokenisation within the statutory discussion of financial-sector technology innovation (ITSK). Determine whether the vendor’s actual model requires the applicable ITSK sandbox, registration or licensing process. Passing a sandbox is not a full business licence. A conventional bond registration does not settle that separate question. (Law No. 4 of 2026, art I, point 92, replacing art 213 and its elucidation; POJK 3 of 2024, arts 10 and 15–20.)
Allocate errors, lost keys and recovery
The documents should allocate each task to a party able to perform it:
- The issuer remains responsible for payment and the accuracy of its debt terms. It must supply timely corporate-action information and fund payments through the agreed paying arrangements.
- The securities registrar and relevant account participants maintain the legally operative records within their respective roles. Their agreements should address reconciliation, disputed instructions and evidence of holdings.
- The custodian’s mandate should distinguish securities custody from token or key custody, including segregation, authorised access, sub-custody and return of assets.
- The Hong Kong distributor handles its investor onboarding, distribution controls and continuing regulatory duties. Its vendor diligence cannot be replaced by the vendor’s own assurances.
- The technology provider operates the token record under documented authority, security controls, audit rights, correction procedures and an exit arrangement.
These are proposed contractual allocations, to be aligned with each party’s statutory and regulatory duties. The monitoring agent’s minimum functions include monitoring the issuer and notifying holders of relevant failures; enforcement authority needs express treatment in the note documents. (POJK 30/POJK.04/2019, arts 13–14.)
For the recommended mirror structure, losing a private key should trigger an authenticated recovery process without extinguishing the recorded debt. Specify who verifies the claimant, freezes the affected token, checks the securities record and authorises replacement. Preserve an audit trail and prevent simultaneous use of the old and replacement tokens. A disputed entitlement requires the agreed dispute process and any necessary court order; an administrator’s technical ability to change a balance does not establish legal authority.
Keep transfer administration separate from a trading service
Assess the website by its functions, users, operator and territorial reach. Active marketing of relevant services to the Hong Kong public from abroad can engage the licensing regime. (Cap. 571, s 115.) Inviting or inducing securities transactions can fall within dealing. Automated trading services can include regular electronic offers resulting in binding transactions, introductions for transactions, and clearing or settlement of qualifying transactions. An order-matching engine is not essential. (Cap. 571, Sch. 5, Part 2, definitions of “dealing in securities” and “automated trading services”.)
The proposed first version should accept authenticated instructions for transfers already agreed through the permitted channels. It should forward them to the responsible intermediary and account participants, display progress and update the mirror only after confirmation. Exclude investor discovery, bid and offer boards, negotiation tools, trade acceptance and autonomous settlement from that initial specification. This design still needs a functional review: calling a facility “administration” creates no statutory exemption.
If broader trading is essential, use an operator with the relevant securities dealing and automated trading permissions, including Type 7 or Part III authorisation where applicable. Check product admission, custody, settlement and licence conditions for this bond. A virtual-asset platform licence alone does not establish the necessary securities permissions. (Cap. 571, ss 95 and 114; SFC circular 25EC57, paras 8–11.)
Also assess whether the website’s functions and links to Indonesia trigger OJK alternative-market or securities-broker permissions, separately from ITSK requirements. Confirm any proposed Indonesian venue’s eligibility to admit this non-public note and its intended users. (POJK 8/POJK.04/2019, arts 1(7), 3 and 6–8; POJK 3 of 2026, arts 1(3) and 2–3.)
The SFC’s April 2026 framework for secondary trading of tokenised SFC-authorised investment products does not approve this private corporate bond or its website. Its scope principally addresses authorised open-ended funds. It must not be used as a substitute for analysing this proposed venue. (SFC circulars 26EC22, paras 1 and 5–6, and 26EC23, paras 1 and 6.)
Complete the structure before accepting subscriptions
First, fix the issuer, repayment terms, security and corporate approvals. Confirm the Indonesian issuance category, professional-investor criteria, foreign-borrowing requirements and any sector-specific approvals.
Second, obtain acceptance of the note and custody chain from the Indonesian arranger and account providers. Agree the issuance memorandum, monitoring and enforcement arrangements, bilingual contracts and securities-account documentation.
Third, complete Hong Kong distributor diligence, investor classification and SFC engagement. Settle the vendor’s Indonesian regulatory status, custody responsibilities, token terms and operational controls before enabling the token service.
Finally, approve a written website specification against the licensing analysis. Test issuance, reconciliation, transfers, failed transactions, lost keys, redemption and vendor exit. Release broader trading only when the necessary permissions and operating arrangements are in place.
Plan the bond review
Licentium’s Token Issuers work addresses issuer structure, securities classification and cross-border offering design. To review proposed Indonesian debt, Hong Kong distribution arrangements and a transfer website together, contact Licentium.